Lala.com stops music streaming service

We reported last month that Lala.com was offering an "iPod compatible" online music service that used free-play of online songs to attract potential buyers. However, Lala.com has now stopped its Beta version of the free music streaming service. The service had the support of the world's fourth largest record company, Warner Music Group.

The company has explained that service has been stopped because its servers couldn't handle the number of users trying to stream music. However, after the company's announcement last month, it was easy to be skeptical about the ultimate financial success of the scheme. Lala said it would pay a cent to record companies for every song played.

Licensing fees were projected to reach over $150 million within two years. Lala said the service will be resumed at some point in the future.